November 2009 Redacted FOMC Statement
| September 2009 |
November 2009 |
Comments |
|
Information received since the |
Information received since the |
Little change; they see the rebound as continuing. |
|
Conditions in financial markets have improved further, and activity in the housing sector |
Conditions in financial markets were roughly unchanged, on balance, over the |
That said, the stock market has stopped rallying. Does the FOMC only look at the stock market, and not notice how much risky bond spreads have rallied? |
| Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. |
Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. |
No change |
| Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. |
Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. |
No change |
| Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability. |
Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability. |
No change |
| With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time. |
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time. |
No change. The Fed assumes stagflation is not possible. |
| In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. |
In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. |
No change. Why is this paragraph needed?
|
| The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. |
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. |
Gives us a clue as to when they will change policy. Look at labor unemployment, capacity utilization, current inflation readings, and future inflation implied by TIPS. |
| To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. |
To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. |
|
| The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010. |
In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. |
No real change. |
| As previously announced, the Federal Reserve’s purchases of $300 billion of Treasury securities will be completed by the end of October 2009. |
Treasury program is done. | |
| The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. |
The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. |
No change. Another useless paragraph. |
| The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted. |
The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted. |
No change. Another useless paragraph. |
| Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen. |
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen. |
No change |
Comments
1) No big deal on fewer Agencies being bought. But what if they decide to do the same to mortgage bonds? They see the bloat building up on the Fed’s balance sheet, and they are beginning to wonder how they will unwind it. The first part is easy, but it gets hard fast.
·
2) Gives us a clue as to when they will change policy. Look at:
o Labor unemployment
o Capacity utilization
o Current inflation readings
o Future inflation implied by TIPS
·
3) The FOMC appears to only look at the stock market when reading financial conditions. Bond spreads have rallied.
·
4) The FOMC assumes that stagflation will not happen again, or that their quantitative easing does not put us in a Japan-style liquidity trap.
November 20th, 20092:21 am at
I must say I haven’t seen this sort of breakdown of Fed FOMC statements anywhere else on the Web! Great work indeed.
I stumbled across your blog on Blogcatalog and have added it to my favorites. I also posted this post on to digg for you. You should really digg all your own posts if you have time so when guys like me come and try to digg it you can get raise the digg score.
Check out my stuff if you get a chance at http://www.diamondslice.com. I’d like to add you to my blogroll titled “have another slice” in my right sidebar and hope you’ll add me to your blogroll as well.
Best of luck,
-Robert